GARDEN GROVE SANITARY DISTRICT (2)

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sewer (i) upon their fifty percent (50%) completion and (ii) upon their completion, but prior to the solicitation of bids for the repair or replacement work. The cost of repair or replacement of each shared sanitary sewer shall be apportioned to each Party according to flows as set forth on Exhibit "B." The total cost shall include both in-house and outside engineering, administration, and construction expenses. Prior to starting the repair or replacement work, the initiating Party shall invoice the other Party for its apportioned estimated cost share. The other Party shall promptly deposit the invoiced amount with the initiating Party. The initiating Party shall keep these monies in a segregated fund and use them only for the project for which they were deposited. Upon completion of the work and payment of all costs, the initiating Party shall submit a report setting forth ali costs incurred together with either an invoice, or a refund for the difference between the actual apportioned cost and the deposit (and any related accumulated interest). All repair and replacement work shall be done in accordance with applicable laws, ordinances, charter provisions related to public work projects, and the applicable standards and specifications of the Party within whose jurisdiction the work is being performed. If, within 30 days after notification, the notified Party disagrees with the necessity for, or disagrees with the estimated cost of, the repair or replacement, it shall so notify the other Party in writing. If the parties are unable to agree upon the need for or cost of the repair or replacement, the Parties may pursue any other remedies authorized by this Agreement. 'T'his Subsection 1(c) shall apply to any replacement of a shared sewer line by a new shared sewer line of equal or lesser capacity. Section 2 of this Agreement shall apply to replacement of existing shared sewer lines by new sewer lines with a capacity greater than the capacity of the line being replaced and the construction of new shared sewer lines. (d) Compliance with Law. Each Party hereby agrees to operate and maintain the shared sanitary sewers within its jurisdiction and those sanitary sewers within its jurisdiction that directly or indirectly connect to shared sanitary sewers in the other Party's jurisdiction in accordance with all applicable federal and state laws and regulations, including, but not limited to, any waste discharge requirements ("WDRs") lawfully established by the State Water Resources Control Board and/or the Santa Ana Regional Water Quality Control Board, and each Party's respective Operation and Maintenance Plan when such pian is adopted (collectively, "Applicable laws and Regulations"), 2. FUTURE SANITARY SEWERS. (a) Annual Determination of Sufficiency of Capacity in Shared Sewers. It is anticipated that future development in the tributary areas to the shared sanitary sewers may lead to a situation in which there is a need for additional capacity, as defined in Section 1, in some of the shared sanitary sewers. On or before October tat of each year, each Party shall determine whether the shared sanitary sewers within its jurisdiction have sufficient capacity, as defined in Section 1, to provide service without limiting connections for the next calendar year. Each Party shall bear their individual cost of performing the sufficiency of capacity determination 579633.1 3